Expandable polystyrene (EPS) and polystyrene (PS)

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A versatile plastic used to make a wide variety of consumer products, expandable polystyrene (EPS) and polystyrene (PS) are integral in industries such as food packaging, appliances, construction, and some niche automotive applications for polystyrene, and for expandable polystyrene construction, white goods packaging, and fish boxes packaging. These industries and more are impacted every day by the dynamics of global and regional PS and EPS markets, as well as developments in the upstream styrene market.

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Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 22 March. NEWS AFPM ’24: LatAm petchems brace for slow path to recovery with all eyes on ChinaThe petrochemicals downturn in Latin America is likely to be the longest ever as Chinese and global overcapacities dampen prices in the world’s quintessential “price taker” region for chemicals. Brazil’s Braskem losses widen in 2023 on poor polymers markets Losses at Braskem widened further in 2023 to more than $900 million on the back of poor market dynamics in polymers, the Brazilian petrochemicals major said late on Monday. Brazil’s Braskem pushes polymers recovery to 2026 despite some green shoots Braskem’s said on Tuesday a recovery in polymers prices in earnest will now only take place from 2026, with the Brazilian petrochemicals major posting again a poor set financial result. Argentina’s manufacturing down 6% in Q4, sector hardest hit amid GDP contraction Argentina’s petrochemicals-intensive manufacturing output fell by 6% in the fourth quarter, year on year, making the sector hardest hit by the recession, the country’s statistical office Indec said on Wednesday. Mexico’s central bank joins monetary policy easing, cuts rates to 11% Mexico’s central bank cut this week the main interest rate benchmark by 25 basis points to 11%, finally joining other Latin American central banks in easing borrowing costs as inflation has fallen consistently. Brazil's central bank cuts interest rates to 10.75% Brazil’s central bank cut again this week the main interest rate benchmark, the Selic, by 50 basis points to 10.75%. Brazil’s farmers import 40% more urea in February before end of season In Brazil, urea imports in February were at 490,328 tonnes, up 40% from 349,452 tonnes in February 2023 as farmers stepped up purchases ahead of the close of the season, according to customs data. PRICING AFPM ’24: LatAm PE margins remain squeezed on imports Polyethylene (PE) imports are expected to remain high throughout Latin America during the second quarter, with deliveries from the US to continue dominating. AFPM ’24: Latin America PP demand still in doldrums, supply ample on high imports Latin America polypropylene (PP) supply is to remain sufficient in coming months due to lackluster demand, with a high level of imports still the predominant feature. AFPM ’24: LatAm PS supply to remain ample; demand to drop due to seasonality Latin America’s polystyrene (PS) supply is to remain ample as demand continues to be weak. Ethanol prices rise amidst stable supply and demand in Brazil Prices for hydrous ethanol were assessed higher this week, with stable supply and demand across the country.

25-Mar-2024

INSIGHT: Controversial EU Packaging and Packaging Waste Regulation approaches adoption

LONDON (ICIS)–Details of the provisional agreement on the Packaging and Packaging Waste Regulation (PPWR) have been published, containing a number of wide-ranging elements which will reshape the packaging sector across the next two decades. The regulation is now reaching its final stages but has faced a fraught journey through the various legislative chambers of the EU and has remained divisive among both legislators and the markets. Under the provisional agreement the regulation will introduce: Mandated packaging recyclability Minimum recycled content and reuse targets across packaging – albeit with potential derogations based on availability of recycled material Mandatory deposit return schemes (DRS) and separate packaging collection targets New reporting and labelling obligations The extension of extended producer responsibility (EPR) schemes A restriction on the placing on the market of food contact packaging containing per- and polyfluorinated alkyl substances (PFAS) above certain thresholds A restriction on plastic collation films except for transportation purposes The possibility of bio-based plastic contributing to recycling targets The allowance of imports to count towards recycling targets provided they are of similar quality as domestic material and have been separately collected The Committee of the Permanent representatives of the Governments of the Member States to the European Union (Coreper) endorsed the Packaging and Packaging Waste Regulation on 15 March following amendments to the provisional agreement reached by the EU Parliament and EU Council (but not endorsed by the EU Commission) during the trilogue negotiations. The European Parliament Committee on Environment, Public Health and Food Safety (ENVI) endorsed the provisional agreement on 19 March. NEW RE-USE TARGETSBy 1 January 2030, 40% of most transport packaging used within the EU – including e-commerce – will need to be reusable and ‘within a system of reuse’. This includes pallets, foldable-plastic boxes, boxes, trays, plastic crates, intermediate bulk containers, pails, drums and canisters of all sizes and materials, including flexible formats or pallet wrappings or straps for stabilisation and protection of products put on pallets during transport. From 2040 this will increase to 70%.  Some players said that this amounted to a defacto ban on flexible plastic transport packaging because of the difficulty in reaching the reuse target. By 2030, 10% of grouped packaging boxes for stock keeping or distribution will need to be re-usable. Controversially, cardboard boxes will be exempt from these reuse targets, which could see an increased shift to the material. Dangerous goods transport packaging, large scale equipment transport packaging, and flexibles in direct contact with food and feed as defined in Regulation (EC) No 178/2002, and food ingredients as defined in Regulation (EU) No 1169/2011 will also be exempted. By 2030, distributors of alcoholic and non-alcoholic beverage sales packaging will need to meet a 10% reuse target, which will increase to 40% by 2040. Some classes of alcoholic beverage, including highly perishable alcoholic beverages will be exempted. RECYCLABILITY AND REUSEBy 2030 all packaging must be recyclable or reusable. To be classed as recyclable, packaging must be: Designed for recycling Separately collected Sorted in to defined waste streams without affecting the recyclability of other waste streams Possible to be recycled so that the resulting secondary raw materials are of sufficient quality to substitute the primary raw materials Packaging recyclability performance grades are to be established by packaging category and classified as grades A, B or C. After 1 January 2030 any packaging that falls below grade C will be restricted from sale in the market. After 1 January 2038 packaging classified below grade B will be banned from sale in the market. Under the legislation, along with design for recycling assessments from 2035 an additional assessment will be added based on the weight of material effectively recycled from each packaging category – with the packaging categories under the design for recycling assessment established in Article 6 paragraph 6 of the provisional agreement. The EU Commission will be given power to adopt delegated acts to establish the detailed criteria for the design for recycling criteria under the packaging categories, with criteria to be set-out by 1 January 2028. Also from 2035, a requirement that material be ‘recycled at scale’ will be added to the recyclability assessment, with the EU Commission able to amend the thresholds. The definition of packaging waste recycled at scale requires separate collection sorting and recycling of material across the EU as a whole (including of waste exports) in installed infrastructure for each of the packaging categories of at least 55% for all materials except for wood which requires at least 30%. Assessments of recyclability will include the impact on recycling systems of the inclusion of things such as barriers, inks and labels. By the end of 2026 the EU Commission will be required to prepare a report on ‘substances of concern’ that might negatively affect recycling or reusability, with additional restrictions added for those substances under recyclability assessments. Member states will be able to request the EU Commission consider restricting substances they consider detrimental to recycling. Within 7 years from the date of application of the regulation, the Commission will be required to evaluate whether the design for recycling requirements have contributed to minimising substances of concern. A five-year exemption on meeting recyclability targets will be given for innovative packaging, along with an exemption for medical goods and medical goods packaging, dangerous goods and packaging for food-contact material specifically made for infants. Sales packaging made from lightweight wood, cork, textile, rubber, ceramic or porcelain is also expected to be exempted from most of the recyclability requirements. MINIMUM RECYCLING TARGETS FOR THE PACKAGING CHAINUnder the provisional agreement, from 1 January 2030, or three years after the introduction of the related implementing act (whichever is later) all plastic packaging placed on the market in the EU must include a minimum percentage of recycled content from post-consumer waste – by weight – of: 30% for contact sensitive packaging (this is generally packaging that comes into contact with food or medical supplies), excluding single-use bottles made from polyethylene terephthalate (PET) as the major component 10% for contact sensitive packaging made from plastic materials other than PET, except single use plastic beverage bottles 30% for single use plastic beverage bottle 35% for all other packaging By 2040, this will increase to: 50% for contact sensitive plastic packaging made primarily from PET, except for single use plastic beverage bottles 25% for non-PET contact sensitive plastics, with the exception of single use beverage bottles 65% for single use beverage bottles and all other plastic packaging The recycled content targets will allow the use of material from ‘third countries’ – those outside of the EU – the allowance of which has been one of the most contentious and heavily lobbied parts of the bill on either side of the argument. Material from outside of the EU will need to have been separately collected, and have equivalent specification to the requirements listed in the PPWR, the Waste Framework Directive (2008/98/EC), and the Directive on the reduction of the impact of certain plastic products on the environment ((EU) 2019/904). Medical packaging, transportation of dangerous goods, compostable plastic packaging and food packaging for infants and young children will be exempt from the recycled targets. The Commission is obliged to adopt implementing acts establishing a methodology for the calculation and verification of these recycled percentages by 31 December 2026. The Commission will be able to amend the targets based on "excessive prices of specific recycled plastics" and on the grounds that the amount of recycled content would pose a threat to human health or result in non-compliance with Regulation (EC) 1935/2004 – or to any plastic part representing less than 5% of the total weight of the whole packaging, which would typically include things such as functional barriers. By 1 January 2028 the Commission will be required to assess the need for further exemptions from recycled content targets for specific plastic packaging based on a lack of suitable recycling technologies. It will have the power to introduce implementing acts to amend the recycled content targets based on those assessments. Member states will also be able to exempt economic operators from the recycled content targets for 5 years as long as: that Member State has reached 5 percentage points above the 2025 recycled targets for recycling of packaging waste per material It is expected to reach 5 percentage points above the 2030 target (as assessed by the EU Commission) It is on track to meet waste prevention targets under the PPWR It has reached a 3% waste prevention by 2028 compared with a 2018 baseline The economic operators have adopted a corporate waste prevention and recycling plan that contributes to achieving the waste prevention and recycling objective The five year exemption can be renewed by Member States provided the conditions remain filled. This would appear to lead to the prospect of uneven trading conditions across the EU. The targets will be calculated by year and manufacturing plant. The 2030 targets under the PPWR will replace the targets set out in the Single Use Plastics Directive (SUPD) from 2030, but the pre-2030 targets in the SUPD will remain. EPR schemes will be extended under the legislation and must be set-up to ensure that fees to producers (or those with producer responsibility in the case of imports) are sufficient to cover the ‘full waste management’ cost of packaging waste, but actual fees are not stipulated in the legislation. The provisional agreement states that players contributing to EPR schemes should be given priority access at market prices to recycled material corresponding to the amount of packaging placed in a Member State by each individual economic operator. SINGLE-USE PLASTICS, PACKAGING WASTE TO LANDFILL, AND PFAS BANSThere will be further bans on single-use plastics introduced by the PPWR, which remain broadly inline with those proposed in the EU Council’s bargaining position. Significantly, for the recycled low density polyethylene (R-LDPE) flexible market this includes a ban on plastic film wrap grouping bottles, cans, tins, pots, tubs, or packets together in multi-packs at point of sale, but will not include wrap used for business-to-business distribution. This could also impact on pyrolysis-based chemical recyclers because post-consumer flexibles have been identified by the sector as a potential key feedstock source. The agreement also includes a ban on food-contact packaging containing PFAS above certain thresholds. There will also be a restriction on sending packaging waste that can be recycled to landfill or incineration, which could result in a higher sorting requirements and costs for waste managers. BIO-BASED MATERIALBy three years from the entrance in to force of the PPWR the EU Commission will be obliged to review the state of technological development and environmental performance of bio-based plastic packaging. Following this, the Commission will be required to bring forth legislative proposals for targets to increase the use of bio-based plastics in packaging, this will include the possibility of bio-based material contributing to recycling targets for food-contact material where recycled material is not available. This is likely to impact most heavily on the polyolefins and polystyrene sectors. CHEMICAL RECYCLINGThe original commission draft appeared to clarify and support the use of chemical recycling as counting towards the targets as long as its end use is not for fuel or backfill. In a blow for chemical recyclers, however, the wording around definition of recycling has been removed, and now refers back to Directive 2008/98/EC which forms the basis of the majority of EU recycling legislation definitions. Directive 2008/98/EC defined recycling as “any recovery operation by which waste materials are reprocessed into products, materials or substances whether for the original or other purposes. It includes the reprocessing of organic material but does not include energy recovery and the reprocessing into materials that are to be used as fuels or for backfilling operations." This has left the legal status of chemical recycling uncertain, particularly for pyrolysis – the dominant form of chemical recycling in Europe – where mixed plastic waste is commonly converted to pyrolysis oil – a naphtha substitute – before being reprocessed into recycled plastics. MEMBER STATE TARGETS AND DEPOSIT RETURN SCHEMES (DRSs)Member state targets and obligations to implement DRSs remain broadly the same as in the EU Council’s bargaining position paper. The exception is that the figure on the collection figure for member states to exempt themselves from a DRS scheme has been increased to 80% by weight of applicable packaging placed on the market for the first time in 2026, up from 78% in the EU Council's bargaining position. The legislation's passage through the EU has been fraught, with the EU Commission objecting to the provisional agreement between the Parliament and the Council, and with widespread talk circulating in the run up to the vote that the members would not support it at Coreper. These factors are understood to be behind the last minute amendments. The regulation now faces a final approval vote in the EU Parliament’s April plenary session, if it passes that vote it will be adopted in to law. Insight by Mark VictoryAdditional reporting by Matt Tudball

25-Mar-2024

Eurozone private sector moves closer to stability in March, UK firms

LONDON (ICIS)–The eurozone private sector came close to stabilising this month, driven by a more pronounced return to growth footing for services, but the disparity between a stronger southern Europe and ongoing weakness in France and Germany continued. Flash eurozone composite purchasing managers’ index (PMI) data for the month showed that business activity in the currency bloc firmed to 49.9, within striking distance of a growth territory after over a year of contraction. A PMI score of above 50.0 signifies growth. Improving fortunes for the eurozone private sector were driven predominantly by a jump in private sector demand, with the industry’s PMI jumping to 51.1 compared to 50.2 in February. The manufacturing sector continued to languish in recessionary territory, with a PMI of 46.8 in March compared 46.6 the previous month, the strongest performance in 11 months. Despite the tepid pace of improvement for Europe’s manufacturing sector, rates of order book volume declines moderated for the fifth consecutive month, according to data from S&P Global. Conditions were more robust for the service industry, but the pace of growth remains substantially below that seen this time last year, when depressed manufacturing sector conditions were more strongly offset by growth in the sector. A north/south divide in the eurozone recovery noted last month, with Spain and Italy firmly back on growth footing, France remaining subdued and output continuing to fall in Germany, has continued into March, according to S&P. “The downturn in France is more widespread than in Germany, with both the manufacturing and services sectors contracting. In Germany, on the other hand, it's only the manufacturing sector that is showing negative growth, while the services sector is broadly stagnating,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which helps to assemble to PMI data. “None of this is encouraging, and compared to the eurozone economy as a whole, both economies are laggards,” he added. The UK’s economic recovery continued during the month but lost pace slightly in March, with composite PMI falling to 52.9 from 53 in February. Service sector momentum slowed during the month, falling to 53.4 from 53.8 on the back of pressure on household incomes, but manufacturing productivity rallied from 47.5 to 49.9 month on moth, close to stable footing, on the back of customer restocking. “Further robust expansion of business activity ended the economy’s best quarter since the second quarter of last year. The survey data are indicative of first quarter GDP rising 0.25% to thereby signal a reassuringly solid rebound from the technical recession seen in the second half of 2023,” said S&P Global chief business economist Chris Williamson. Thumbnail photo: Vehicle production at Volkswagen's Zwickau, Germany, site (Source: Martin Divisek/EPA-EFE/Shutterstock)

21-Mar-2024

China extends ADDs on MIBK from South Korea, Japan, South Africa

SINGAPORE (ICIS)–China has imposed anti-dumping duties (ADD) on imports of methyl isobutyl ketone (MIBK) from South Korea, Japan and South Africa for another five years starting 20 March 2024, the Chinese Ministry of Commerce said. There were no changes in the duty rates, which range from 15.9% to 190.4% depending on origin. Company Duty rate South Korea   Kumho P&B Chemicals Inc 18.5%   All others 32.3% Japan   Mitsui Chemicals Inc 45.0%   Mitsubishi Chemical Corporation 47.8%   All others 190.4% South Africa   Sasol South Africa (Pty) Ltd 15.9%   All others 34.1% The ADDs had been in place for five years from 20 March 2018 to 19 March 2023, and were extended for another year of investigation. The ministry said scrapping the measure would result in re-occurrence of dumping.

20-Mar-2024

US Trinseo seeks to sell stake in AmSty

HOUSTON (ICIS)–Trinseo has started the process to sell its 50% stake in Americas Styrenics (AmSty), the US-based engineered materials producer said on Wednesday. AmSty makes styrene and polystyrene (PS). The company has initiated the ownership provision in the joint venture agreement. That provision includes a structured mechanism that will lead to the sale of Trinseo's stake in AmSty. "We have a clear pathway to divest our interest in the joint venture," said Frank Bozich, CEO. "We expect the exit process to lead to a definitive arrangement no later than early 2025." Trinseo did not name any prospective buyers or how much money it could make on the deal. Trinseo will spend the proceeds of the sale on paying down $1.077 billion in recently issued term loans. Those loans mature in 2028. Chevron Phillips Chemical owns the remaining stake in AmSty. Trinseo is also trying to sell its wholly owned styrenics assets, with a focus on marketing individual plants and regional businesses. Trinseo's other businesses include Latex Binders, Base Plastics and Engineered Materials. Thumbnail shows a cup made of polystyrene. Image by ICIS.

13-Mar-2024

Brazil’s Unigel halts fertilizers production on high natural gas prices

SAO PAULO (ICIS)–Unigel is to “temporarily stop” nitrogen fertilizers production because of high costs and low prices, effective on Wednesday, the Brazilian chemicals and fertilizers producer said. Unigel said natural gas prices in Brazil are one of the highest in the world, and six times higher than in the US or the Middle East, “despite efforts” by multiple stakeholders, including the government, to lower them. “Unigel suffered losses throughout 2023 and also in 2024, but it retained the majority of its staff in expectations that negotiations and work fronts seeking to reduce the price of natural gas would be successful,” said the company. “The company will continue to have a minimum infrastructure for maintenance and preservation of assets, in addition to ensuring compliance with legal and socio-environmental commitments.” Unigel’s move comes after it signed a tolling agreement with Petrobras in December for the functioning of two nitrogen fertilizers plants in the states of Sergipe and Bahia. The two plants were leased to Unigel by Petrobras in 2019. It also comes just weeks after Unigel’s creditors agreed to a debt restructuring of the company’s beleaguered financial metrics. The plant in Camacari, Bahia, can produce 475,000 tonnes/year of ammonia and 475,000 tonnes/year of urea. The plant in Laranjeirs Sergipe, can produce 650,000 tonnes/year of urea, 450,000 tonnes/year of ammonia and 320,000 tonnes/year of ammonium sulphate (AS). “[After leasing the plants in 2019] Unigel contributed to reducing the country's extreme dependence on the import of nitrogen fertilizers by approximately 15%, which is essential for agribusiness, today the most important sector of our economy, and directly impacts Brazilians' food security,” said Unigel. “Furthermore, Unigel is the only national producer of ARLA, an additive added to diesel engines to reduce the emission of polluting gases.” The company added that once the precedent conditions in the tolling contract have been met, it would be able to “reevaluate the resumption” of production. Unigel's chemicals divivions produces styrene and polystyrene (PS), among other materials. Front page picture source: Unigel

06-Mar-2024

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 1 March. NEWS Mexico’s manufacturing returns to expansion on higher salesMexico’s manufacturing contraction in January was a blip, with output returning to growth in February as sales grew, analysts at S&P Global said on Friday. Brazil’s manufacturing at 20-month high on strong new orders book Brazil’s manufacturing PMI index continued expanding in February as firms increased their output to cater for a healthy new orders book, analysts at S&P Global said on Friday. MOVES: Brazil’s Unipar CFO resigns Unipar’s CFO Antonio Campos Rabello has handed in his resignation, effective 29 February, the Brazilian chemicals producer said late on Tuesday. Surging PET imports reflect Mexico's growing industrial appetiteMexico has seen a significant rise in PET imports since 2021, indicative of heightened demand for this versatile polymer across diverse sectors within the country's burgeoning economy. Persistent weak petchems, longer-than-expected spreads recovery to hit Braskem – S&P Brazil’s petrochemicals major Braskem’s profitability in 2024 will be hit by a delay in a recovery in spreads due to “persistent” weak markets, according to US credit rating agency S&P Global. Petrobras and ArcelorMittal mull joint low-carbon projects Brazilian state-owned energy major Petrobras and steel major ArcelorMittal have signed a memorandum of understanding (MoU) to jointly develop low-carbon projects. PRICING LatAm PE domestic prices up in Brazil, Colombia due to producers squeezed margins Domestic polyethylene (PE) prices were assessed higher in Brazil and Colombia on the back of squeezed margins from local producers. In other Latin American countries prices were steady this week. LatAm PP prices steady to higher due to increased feedstock costs, narrow margins Domestic polypropylene (PP) prices were assessed higher in Argentina, Brazil, Chile and Mexico on the back of higher feedstock costs and narrow margins. In Colombia prices were steady.

04-Mar-2024

Brazil GDP up 2.9% on agriculture, chems lead fall in manufacturing output

SAO PAULO (ICIS)–Brazil's chemical sector led a fall in manufacturing output in 2023, but the story was more positive for the rest of the economy which grew 2.9% compared with 2022, according to national statistics office IBGE. Despite the large annual increase, economists are warning that output sharply decelerated in the two final quarters of the year, which could pose a headwind in coming quarters. WEAK CHEMICAL SECTORIBGE’s final figures for manufacturing output in 2023 confirmed what Brazilian chemicals producers, who have been besieged by cheaper imports, have been complaining about for months through their trade group Abiquim. Industrial growth increased 1.6%, but much of this was due to the extractive industries which were up nearly 9% compared with 2022, with oil and gas both posting strong performances. However, manufacturing output – an industrial subgroup –  decreased 1.3% year on year in 2023, with chemicals and other key end markets seeing negative growth. “[The fall was] mainly caused by the drop in the manufacturing of chemical products, machines and equipment, metallurgy and the automotive industry,” said IBGE. Automotive is a key end market for chemicals. In addition, IBGE said output in the equally petrochemicals-intensive construction sector had fallen by 0.5% in 2023 year on year. However, many manufacturing companies will be hoping that a healthy performance at the beginning of 2024 can be sustained through the year. This was after the manufacturing PMI index entered expansion territory in January and February after 11 months of contraction. Brazil manufacturing January 2024 December 2023 November October September August July June May April March February PMI index 52.8 48.4 49.4 48.6 49.0 50.1 47.8 46.6 47.1 44.3 47.0 49.2 Source: S&P Global AGRICULTURE PROPS UP GROWTHOutput in the fertilizer-intensive agricultural sector rose by 15.1% year on year in 2023, lifted by record high harvests mostly in the first half of the year. Brazil's agricultural sector is very export-focused and the country is fast becoming one of the world’s  breadbaskets. The past two years – since Russia invaded Ukraine – has seen its position strengthen, with the war disrupting output from two key European producers. Agriculture now accounts for around a quarter of the country’s output, with the Brazilian climate allowing farmers to plant two harvest per year for several crops. “According to the Systematic Survey of Agricultural Production (LSPA/IBGE), several crops recorded production growth in the year 2023, with highlights being soybeans (27.1%) and corn (19.0%), which achieved record productions in the historic series,” said the statistics office. “On the other hand, some crops recorded a drop in the annual production estimate, such as, for example, wheat (-22.8%), oranges (-7.4%) and rice (-3.5%).” Output from Brazil's services sector rose by 2.4% in 2023 year on year compared with 2022. As a result, Brazilian output rose to Brazilian reais (R) 10.9 trillion ($2.19 trillion) in 2023, said IBGE, putting it among the world’s 10 largest economies. However, Brazil remains an emerging market. GDP per capita for the country's 215 million inhabitants is just over R50,000 ($10,130). For most, salaries remain low. Last year, the minimum wage was just above R1,300 ($260). GDP per capita is below some of its main Latin American peers. The economic performance of Brazil and Argentina are intertwined as they have strong bilateral ties and the two are often compared to each another. In 2023, GDP per capita in Argentina was well over Brazil's at $13,700, even though it has been in a long economic crisis. SLOWING TRENDBrazilian GDP of 2.9% in 2023 was in stark contrast to most forecasts from private and public bodies at the beginning of the year, when most expected it to grow by around 1%. Healthy harvests in the first half of the year propped up growth, but IBGE said quarterly growth in Q4 was flat with Q3, when it was already flat compared with the April-June quarter. The government of Luiz Inacio Lula da Silva, who took office in January 2023, was quick to highlight how the final GDP growth figure was far higher than its own expectations. However, the clear deceleration in second-half output has raised alarm bells among some, who said “it was clear” that much of the growth now celebrated by the government had taken place in H1, according to Jorge Jatoba, an economist quoted on financial news site Movimento Economico. “In the second half, the economy performed poorly. Q3 and Q4 had practically zero growth, compared to the previous quarter,” said Jatoba. “The general analysis of the year is good news – but not that much.” Focus article by Jonathan Lopez ($1 = R4.95)

04-Mar-2024

Brazil’s Unigel gets green light from creditors for debt restructuring

SAO PAULO (ICIS)–Unigel has agreed a Brazilian reais (R) 3.9 billion ($791 million) debt restructuring with its creditors, which has saved the beleaguered styrenics, acrylics and fertilizer producer from filing for bankruptcy for the time being. The agreement includes raising a new $100 million credit line that will mature in 2027, and give its shareholders “economic benefits corresponding” to 50% of the company, it said. An intention to improve the company’s governance structure is also included, although Unigel did not disclose further details. The restructuring will consist of the issuance of new debt securities and participatory securities in exchange for the cancellation of current debts. One-third of Unigel’s creditors, those with earlier maturities, have agreed to the deal and will apply for 90-day protection to finalize it, which has been made possible under Brazil's financial laws. “The plan will allow the improvement of the company's capital structure, with an increase in its liquidity and a significant reduction in leverage, in order to guarantee the continuity of the business plan that was severely impacted by the crisis in the global petrochemical industry,” said Unigel’s CEO, Roberto Noronha. CFO André Gaia said the new funds will be partly directed to finalizing projects such as Unigel's sulphuric acid plant at Camacari in the state of Bahia. Construction has been on hold since 2023 when the company's financial position deteriorated. The plant is 80% complete, and when fully operational it should produce around 450,000 tonnes/year. REVIVALUnigel’s fortunes took a turn for the worse in 2023 on the back of high input costs – especially at its natural gas-intensive fertilizer operations – poor demand and low prices. It has not published a financial report since Q1 2023, something contemplated under Brazilian financial law for companies under stress. After a poor Q1, Fitch and S&P both lowered the company’s credit ratings several times and put Unigel’s debt obligations at the lowest level to indicate a high probability of default. However, “intense negotiations” with creditors that began in October, after Unigel failed to pay a coupon on one of its bonds, appeared to bear fruit in November when it reversed its decision to shut down the Bahia fertilizers plant. For that to take place, Unigel’s talks with its creditors were accompanied by talks with the government and its appointees to lead the state-owned energy major Petrobras, which supplies natural gas to Unigel. President Luiz Inacio Lula da Silva has repeatedly said that Brazil needs a stronger fertilizer industry as is too dependent on imports to cover booming demand from its growing agricultural sector.  The sector has made Brazil one of the world’s breadbaskets and accounts for around a quarter of the country's output. Although details have not been made public, in December, the two companies agreed a tolling agreement for Unigel’s fertilizers plants in Camacari and Laranjeiras, in the state of Sergipe. The two plants were leased from Petrobras in 2019. Capacity at the Bahia plant is 475,000 tonnes/year for ammonia and 475,000 tonnes/year for urea. The Laranjeiras facility has a capacity of 650,000 tonnes/year of urea, 450,000 tonnes/year of ammonia, and 320,000 tonnes/year of ammonium sulphate (AS). The Petrobras-Unigel agreement in December came just weeks after Unigel charged Petrobras for its “unbearable natural gas prices” when it explained to workers at the Camacari plant about redundancies resulting from its closure. As part of the talks with its creditors, Unigel divested its Mexican subsidiary which produces acrylic sheet Plastiglas for an undisclosed amount in December. With an expected improvement in chemicals and fertilizers prices and a helping hand from Petrobras and/or the Brazilian government, Unigel may have managed to avoid a bankruptcy which many had taken for granted a few months ago. At the annual meeting of the Latin American Petrochemical and Chemical Association (APLA), held in Sao Paulo in November, one petrochemicals source foresaw this week’s events. “Unigel has been in financial trouble many times before, and it always got through them. This time looks bad, but it may yet again save the day,” the source said. Focus article by Jonathan Lopez Thumbnail shows Brazilian money. Image by RHJPhtotos.

21-Feb-2024

India’s Styrenix plans ABS, PS capacity expansions in Gujarat

MUMBAI (ICIS)–India’s Styrenix Performance Materials (SPM) expects to begin operations at its expanded acrylonitrile butadiene styrene (ABS) and polystyrene (PS) capacities at Dahej and Nandesari in the western Gujarat state before 2028, a company source said on Friday. SPM plans to invest Rs6.5bn ($78m) on the expansion projects. Its ABS capacity will grow to 210,000 tonnes/year over the next four years, from 85,000 tonnes/year currently; while its PS capacity will be raised to 150,000 tonnes/year over the next three years from the current 66,000 tonnes/year, based on the plan released in October 2023. Funding the brownfield expansions will be through a mix of internal accruals and debt, SPM said. “The expansion will be done in a phased manner and capacity will be increased gradually over the next few years,” the company source said. The expansion of production capacities will help SPM meet increasing domestic demand for ABS and PS, he sai. “We expect to see robust growth in in our existing markets like automobiles, household appliances, medical devices, electronics, [among others],” the source said. SPM is formerly known as INEOS Styrolution India. It was renamed in January 2023 after INEOS Styrolution sold its entire stake in the company to Shiva Performance Material in August 2022. ($1 = Rs83)

16-Feb-2024

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